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16 September, 18:03

Blossom Company had the following account balances at year-end: Cost of Goods Sold $62,050; Inventory $14,310; Operating Expenses $29,590; Sales Revenue $127,880; Sales Discounts $1,110; and Sales Returns and Allowances $1,900. A physical count of inventory determines that merchandise inventory on hand is $12,550.

Required:

a. Prepare the adjusting entry necessary as a result of the physical count.

1. Account Titles and Explanation

Debit Credit

2. Account Tiles and Explanation

Debit Credit

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Answers (1)
  1. 16 September, 19:48
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    Account Titles and Explanation Debit Credit

    (a) Cost of Goods Sold ($14,310-$12,550) $1,760

    Inventory $1,760

    (b) Sales Revenue $127,880

    Income Summary $127,880

    Income Summary $96,410

    Cost of Goods Sold ($62,050 + $1,760) $63810

    Operating Expenses $29,590

    Sales Returns and Allowances $1,900

    Sales Discounts $1,110

    Income Summary ($127,880 - $96,410) $31,470

    Owner's Capital. $31,470

    Explanation:

    The difference of Closing book value and physical count is charges to the cost of goods sole.

    All the revenue and Expenses account are closed in Income summary account.

    Balance in the Income summary account after posting all adjustments is transferred to owner's capital account
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